China's pace of technological innovation has far exceeded all US predictions.

With remarkable advancements in lithium-ion batteries, electric vehicles, and next-generation nuclear technologies, Chinese companies are rapidly closing the gap with their Western counterparts. Thanks to strong government support, abundant human resources, and a vast domestic market, these companies have the potential to not only match but surpass multinational corporations within the next decade.

Can China innovate and surpass the US in the race for technological dominance?

A comprehensive 20-month study of 44 leading Chinese technology companies has sounded the alarm for the United States. Key sectors such as nuclear power, semiconductors, artificial intelligence (AI), electric vehicles, and materials science have demonstrated the significant innovative capabilities of these businesses.

In late September, at an event on Capitol Hill, experts from the Information Technology and Innovation Foundation (ITIF) – a Washington-based research organization – presented research findings showing that the rapid development of technology in China poses serious challenges to the United States, requiring policymakers to take decisive action.

Research expert Stephen Ezell, Director of ITIF, surprised attendees by declaring at the meeting: "China's innovation system, despite its limitations, has developed far beyond previous assessments."

"While it's too early to definitively say China is leading comprehensively, evidence suggests it has been and continues to excel in certain specific areas. Furthermore, in many other sectors, Chinese businesses are fully capable of matching or surpassing their Western counterparts within the next decade," Stephen Ezell stated.

Stephen Ezell stated that Chinese companies are "leading the way" in the fields of nuclear energy, electric vehicles, and batteries. However, he also pointed out that the pace of innovation in the country's advanced semiconductor sector remains relatively slow.

To evaluate companies, analysts typically consider factors such as investment in research and development, the quality of their workforce, the existence of innovation teams, international awards, and market share. They then compare these factors to those of leading global companies in the same field.

According to Robert Atkinson, President of ITIF, China could soon surpass the US by 10-15 years in deploying large-scale fourth-generation nuclear reactors.

Currently, the world's second-largest economy is leading in nuclear power plant construction, with the rate of new construction far exceeding that of all other countries combined. In the past decade, it has built more reactors than the United States has built in the past 30 years.

By 2030, China is expected to surpass the US in nuclear power production as it has become the first country to deploy and operate advanced fourth-generation reactors with new designs and passive safety systems.

Stephen Ezell expressed his astonishment at the rapid growth of China's automotive industry. From a modest 5,200 vehicles in 1985, the country is expected to produce 26.8 million this year, accounting for 21% of the global market share. He predicted this figure would increase to 30% by the end of the decade.

China currently holds a dominant position in the global market with 62% of electric vehicle production and 77% of EV battery production, demonstrating its absolute superiority in the electric vehicle manufacturing sector.

In the biopharmaceutical sector, the ITIF investigation found that while China still lags behind leading countries like the US and the West, it is rapidly catching up. From 2002 to 2019, China's global value-added market share in the biopharmaceutical industry quadrupled to nearly 25%.

In the field of robotics, Ezell stated: "We find that Chinese companies themselves lack the innovation of American, South Korean, or Japanese companies, with the exception of Kuka, a German industrial robot manufacturer that was acquired by Chinese home appliance manufacturer Midea Group in 2016."

However, last year, China deployed more industrial robots than the rest of the world combined, the ITIF director added. "This means they will see a greater impact from robotics and automation, driving the development of industries."

Regarding semiconductors, the investigation revealed that China lags behind the world's leading countries by approximately 2 to 5 years, with the most advanced chips produced by Huawei Technologies lagging behind by 3 years.

In 2020, Huawei faced severe US sanctions that prevented it from accessing advanced chip supplies. However, last year, the company surprised the Washington administration by launching a new smartphone powered by domestically produced advanced semiconductor chips.

The US continues to impose new sanctions on China.

To protect its leading technological position, the U.S. Department of Commerce issued new regulations last September to tightly control the export of quantum computers and advanced chip manufacturing equipment. These measures are expected to prevent sensitive technology from falling into the hands of competitors.

This move comes after the ministry issued export controls in 2022 aimed at restricting China's access to advanced computer chips, hindering the development and maintenance of supercomputers, and limiting the country's semiconductor manufacturing capacity.

To comply with the US government's ban, American companies like Nvidia have had to adjust their products, offering versions of chips with more limited performance to the Chinese market, instead of their most advanced chips.

The rise of domestic companies like Huawei has put significant competitive pressure on Nvidia, causing its revenue from the Chinese market to fall from 26% to 17% over the past year.

Rick Switzer, a former technology policy officer at the U.S. State Department, warned that China is catching up with the older types of chips used to manufacture everything from washing machines and refrigerators to defense systems.

Rick Switzer asserted that the ITIF report dispelled unfounded doubts about China simply copying technology from the West. According to him, the report clearly demonstrated China's independent innovation capabilities.

He cited the recent visit of Ford's senior executives to China as an example. They found that electric vehicles manufactured in China were not only competitively priced but also possessed superior innovative features. This clearly demonstrates that China's automotive industry is constantly innovating.

Switzer asserted that China has invested significant resources and manpower in developing its own technology and has achieved remarkable successes.

Tesla can attest to this challenge. In 2023, China's BYD emerged as the world's leading electric vehicle manufacturer, selling around 3 million vehicles. That same year, Elon Musk's company sold 1.81 million vehicles globally, and in the first half of 2024, Tesla's sales in China declined by 5%.

In response to this situation, the Washington administration stepped in. Last May, US President Joe Biden ordered a 100% tariff on Chinese electric vehicles. Biden aims for the US to produce electric vehicle batteries by 2030 without relying on crucial mineral resources from China.

Switzer observed that American and Chinese researchers have jointly published a large number of scientific papers, far exceeding any other country. He also noted that, despite attracting many Chinese students to study in the US, the US has failed to retain many of these talents, with approximately 70% of students choosing to return to work for domestic companies and research institutions.

In his closing remarks at the event, U.S. Congressman John Moolenaar, a Republican from Michigan and chairman of the House Committee on China, stated that capital controls and exports remain crucial to the U.S. defense strategy against China.

"To achieve our ultimate strategic goals against our political rivals, we need to immediately implement export restrictions and tightly control capital outflows. At the same time, strong investment in domestic projects will help us strengthen our position and gain an advantage," said John Moolenaar.

In August 2023, President Joe Biden signed an executive order banning the flow of U.S. capital into Chinese companies involved in advanced technology sectors such as chips, AI, and quantum computing.

Emily Jin, founder of Datena, a leading data analytics company on China, has warned that China is rapidly rising to the top in many cutting-edge technology sectors, aiming to translate its technological advantage into economic and political power.

She also argued that the political environment in China is less polarized than in the US today. The high degree of consensus in implementing industrial policies and technological innovation has helped China achieve remarkable progress.